Stocks rebounded after two days of losses on Wednesday, aided by upbeat job market data as investors eyed a crisis meeting about Greece and a Federal Reserve policy session.
U.S. private employers added more jobs than expected last month, the ADP National Employment Report said. Separate data showed layoffs planned by companies dropped sharply, underscoring the view that the economy is on a path of slow growth.
The energy, materials and financial sectors were among the best performers after having led the market lower in the previous two sessions.
The Dow Jones industrial average gained 194.92 points, or 1.67 percent, to 11,852.88. The Standard & Poor's 500 Index climbed 22.20 points, or 1.82 percent, to 1,240.48. The Nasdaq Composite Index advanced 37.80 points, or 1.45 percent, to 2,644.76.
Europe's financial condition was a wild card for markets as Greek Prime Minister George Papandreou was to meet French and German leaders to discuss the implementation of the bailout deal for Greece. Papandreou's call for a Greek referendum on the $178 billion bailout package, which his cabinet endorsed, sent stocks and the euro into a tailspin on Tuesday.
The Fed looked set to take a breather from monetary stimulus measures. The Fed's monetary policy committee will issue a statement around 12:30 p.m. (1630 GMT) and Chairman Ben Bernanke will hold a news conference at 2:15 p.m. (1815 GMT).
While Bernanke is unlikely to announce a new round of quantitative easing to stimulate growth, he may lay the groundwork for future central bank policies to help the economy deal with stubbornly high unemployment, according to analysts.
The European situation is still a problem for equity investors. Today there are a couple of events for what was a short-term oversold market, on a technical basis, which have driven it higher, said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
The first was the better-than-expected ADP number, which was encouraging for traders and gave them an incentive to go long. More importantly is what will the Fed announce? I don't think anyone is expecting QE3 to be announced today. However, there is some expectation that he (Bernanke) will lay the groundwork for a possible quantitative easing, perhaps after the end of the year.
Citigroup Inc gained 3.7 percent to $30.24 and JPMorgan Chase & Co rose 2.7 percent to $33.58. The KBW Bank index climbed 3.7 percent.
MasterCard Inc shares jumped 7.4 percent to $359.12 after the credit card processor reported its quarterly profit easily beat estimates on double-digit increases in volumes.
The Labor Department's payrolls report for October is due Friday, with private employment expected to have increased by 120,000 jobs. The U.S. unemployment rate, however, is seen holding steady at 9.1 percent.
Papandreou's referendum call triggered a slide in global stocks earlier this week. The U.S. benchmark S&P 500 index fell 5.2 percent over the past two sessions, even as it closed its best month in 20 years on Monday.
(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)